EGYPT. Egypt's new President Mohamed Morsi annulled the Supreme Court's dissolution of the Islamist-dominated parliament on Sunday, the official media said, setting the stage for a possible confrontation with the military.

"President Morsi has issued a presidential decree annulling the decision taken on June 15, 2012 to dissolve the people's assembly, and invites the chamber to convene again and to exercise its prerogatives," the MENA news agency said.

His move risks heightening tensions with the Supreme Council of the Armed Forces (SCAF), which took over after the ouster last year of long-time strongman Hosni Mubarak, after a popular revolt.

The news agency said the SCAF convened an "urgent meeting under the chairmanship of Field Marshal Hussein Tantawi to discuss the presidential measures."

MENA said Sunday's decree stipulates "the organisation of elections for the chamber, 60 days after the approval by referendum of the country's new constitution and the adoption of a new law regulating parliament."

No date has yet been set for the drafting of the post-Mubarak constitution. The 100-member commission tasked with drawing it up met for the first time on June 18 and appointed a respected judge, Hossam al-Ghariani, as its head.

The military dissolved parliament last month after Egypt's top court made its controversial ruling, a day before the second round of the presidential poll that saw the Islamist Morsi become Egypt's first democratically elected head of state.

The powerful Muslim Brotherhood, from which Morsi stood down after his election, at the time described the move as a "soft coup," accusing the military of seeking to monopolise power and demanding a referendum.

The Supreme Constitutional Court had said certain articles in the law governing parliamentary elections were invalid, annulling the Islamist-led house.

It also ruled as unconstitutional the political isolation law, which sought to bar senior members of Mubarak's regime and top members of his now-dissolved party from running for public office for 10 years.

In the absence of a parliament -- in which nearly half of the seats had been won by the Muslim Brotherhood and another quarter by hardline Salafists -- the SCAF assumed legislative power.

Instead of being sworn in before parliament, the 60-year-old Morsi took the oath on June 30 before the constitutional court.

US President Barack Obama will meet Egypt's new president at the UN General Assembly in New York in September, an official in Washington told AFP on Sunday.

Secretary of State Hillary Clinton, who is to visit Cairo on July 14, has congratulated Morsi on his election but cautioned that his victory was just a first step towards true democracy.

"We have heard some very positive statements so far," Clinton said.

But the historic vote was "just the beginning of hard work, and hard work requires pluralism, respecting the rights of minorities, an independent judiciary and independent media," she said.

"We expect President Morsi to demonstrate a commitment to inclusivity that is manifested by representatives of the women of Egypt, of the Coptic Christian community, of the secular, non-religious community and young people," she added.

Clinton's deputy, Bill Burns, was in Cairo on Sunday on the last day of a three-day visit for a wide range of meetings.

The State Department said Burns would "affirm the US commitment to supporting Egypt's democratic transition, central to which is forming a government that respects the rights of all Egyptian citizens, including women and religious minorities."

Despite Morsi's Islamist background, the confirmation of his election brought relief to Obama's administration, which feared that the military would not accept his victory and provoke new chaos in Egypt.

Morsi put Washington further at ease shortly after his victory announcement when he pledged to be a leader for all Egypt, where around 10 percent of the population is Christian, and to honour the country's 1979 peace treaty with Israel.

MIDDLE EAST BUSINESS COMMENT & ANALYSIS

INTERNATIONAL. Unexpected developments can catch the herd wrong-footed and spark major movements when the masses scatter at the same time. When that occurs, those who resisted the herd may find themselves rewarded. We believe that we are approaching such a point.

INTERNATIONAL. This isn't about Netanyahu and Obama, and both know it. It is about the reconfiguration of a region the US cannot subdue and cannot leave. It is the essence of great power strategy: creating a balance of power in which the balancers are trapped into playing a role they don't want.

INTERNATIONAL. This isn't about Netanyahu and Obama, and both know it. It is about the reconfiguration of a region the US cannot subdue and cannot leave. It is the essence of great power strategy: creating a balance of power in which the balancers are trapped into playing a role they don't want.